The Flotation You Should Have Bought

LONDON -- As the old stock market saying goes: IPO stands for "It's Probably Overpriced." Although Facebook is perhaps the current poster child for this proverb, closer to home, the IPO class of 2010 contained quite a few pertinent examples.

SuperGroup (ISE: SGP.L) is perhaps the best-known of the bunch. Floated at 5 pounds, it rose as high as 18 pounds before plunging as low as 250 pence. Now it's right back where it started, having licked its wounds and reflected on how it needs to adapt as a listed company.

Ocado (ISE: OCDO.L) , the online grocer, is another company mentioned in the same breath. It joined the market at 180 pence but currently trades at a third of that price as it continues to struggle toward profitability.

And then there was Betfair (ISE: BET.L) . Starting off at 13 pounds, the company looked as if it would reinvent the world of gambling, but it soon went into reverse and is currently down around 7 pounds. However, the interactive whiteboard-maker Promethean World (ISE: PRW.L) has had the toughest time. Cuts to education budgets have seen it slip all the way from 2 pounds to just 25 pence.

Another company that joined the market in 2010 was health care IT firm EMIS (ISE: EMIS.L) . It was founded in 1987 and now sells software and related services to GP practices. It's reckoned that about half the surgeries in the U.K. use its systems. It looks after patient records for around 40 million Brits.

The company slipped under the radar somewhat back in 2010, although I distinctly remember Maynard Paton remarking in the Fool office back then that it looked to be the best of the bunch -- not that it was up against particularly stiff competition, you could argue.

Today's results showed another impressive performance. Sales are up 19% to 43 million pounds, with profit up by the same proportion to 12 million pounds. Like many software companies, this is a high-margin business. It generates decent amounts of cash, too. EMIS produced 22 million pounds in the last six months, giving the company a net cash position of 17 million pounds.

There's a 15% increase in the dividend payable as well. The shares are up 3% to 700 pence today, valuing the company at just more than 400 million pounds. Based on full-year profit forecasts, that represents a somewhat heady price-to-earnings ratio of 22 and a forward yield of 2%. But investors who hopped on board back in 2010, when the shares floated at 300 pence, probably won't be complaining.

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